Morgan Stanley Smith Barney Starts Merging Client Accounts

The big switch has begun. Morgan Stanley recently brought the first 10% of Smith Barney customer accounts over from their digital homes on Citigroup information systems.

The 725,000 accounts were fed into a fundamentally new system that will serve the combined Morgan Stanley Smith Barney brokerage operation. The accounts were in place, and operating without interruption, when business opened in late February. The transition was so smooth that two bigger switches will now take place in May and July. In each of those moves, another 45%—or 3.2 million accounts—will come onto the Morgan Stanley Smith Barney platform.

All told, accounts with nearly $1 trillion in them will be online, three years after the joint venture got its start in June 2009.

But the story of this transition is not that much about technology. If you were to ask Tom Gooley, the head of operations, or Moira Kilcoyne, the head of technology for the joint venture, what the three keys were, they might sound like real estate salespeople. They'd likely respond: Training. Training. Training.

That's because there was not just a transition of Smith Barney accounts onto a wholly new platform, but Morgan Stanley accounts as well. In fact, 16,000 financial advisors from the two firms had to be ready to pull up accounts and serve customers effectively, from Day One—whatever their personal Day One happened to be.

To get ready for the account transitions, the tech team for the joint venture staged eight mock tests and dress rehearsals in advance. This allowed the team to see if they could, in fact, safely transfer the customer data, how that data would interact with the new system and how they should go about cleaning up any problems—like the effect on accounts of corporate actions such as stock splits. The tests also allowed the company to see if it could handle the onslaught of 7.2 million accounts when they were in place. "That's something you don't want to leave to chance," Kilcoyne says.

What they found let them redesign the so-called critical path that data would take in moving from one system to another. It also told them they had to add a lot more processing capacity to handle the 10,000 processes that would be running simultaneously. But figuring out that the venture would need to triple the amount of processing power on hand, and adding 50% more operations people to oversee what was going on, might be considered the easy part.

Moving over 7,000 Morgan Stanley advisors and 9,000 Smith Barney advisors would be where the digits hit the wall—or not.

Either they could work the system and keep their customers—or not.

Development of the new system, replacing separate Morgan Stanley and Smith Barney systems, took the first 18 months of the project. Then, in 2011, the Morgan Stanley advisors were brought onto the new system. This year, it's time for Smith Barney's advisors to get started.

"The whole exercise of getting people in the door and training people on a new platform and educating the field out there, the financial advisors and the client support associates who actually sit in the branches, was a lot of effort and energy," Gooley, the operations chief, says.

An algorithm was the linchpin to making sure the training was both effective and efficient. The operations and tech team had each advisor and each client support person fill out a survey on what they did on a regular basis. Based on how each individual responded, he or she would get a personalized set of trading modules about the new platform. The algorithm would react to the responses in each survey and create a training program based on that person's duties and the business model of that MSSB branch.

Morgan Stanley created 163 recorded training sessions totaling 22.5 hours of instructions. Handouts included 322 quick reference cards and change pages that showed how procedures or retrieval of information changed in the new system, and compared the new to the old.

But not all the training was online and using the pre-recorded sessions. The operations and tech team also sent trainers out into the field. The basic ratio was one trainer for each 25 persons in a branch, to provide personalized training, Kilcoyne says. The education was a mix of online recorded sessions and in-branch training. The blended approach allowed advisors to take up to 80% of their instruction with an in-branch trainer. Each trainer would show up a month before a conversion, provide instruction and assistance through the changeover and then stay for another month.

In addition, training was delivered in classrooms, one-on-one sessions, in groups and casual lunch-and-learns. "There was a recognition that people learn in different ways, in addition to the fact that they have different needs," Kilcoyne says. In the end, financial advisors would go through 37 training modules each, on average. Each would go through two hours of training in "required essentials" and another hour of specialized business training on areas each needed to be familiar with, such as annuities or alternative investments.

The client support associates each get about six hours of training. This includes 51 essentials courses, as well as review sessions just before the system conversion. Then, there are 24 core training courses, which users will follow up on right after conversion, and two productivity courses, for users comfortable with the changes who want to go deeper. Every user was scheduled to complete a one-on-one "show-me" session with a trainer.

The company has two call centers. The joint venture oversaw the addition of about 15% more support personnel to each center, to handle an expected flood of calls about the seven years of records being switched over. That involved 2 billion documents, 750 million historical transactions and 12 trillion bytes of images of account statements and account opening documents. "We were expecting just tons and tons and tons of questions into our call centers in these last two weeks," Kilcoyne says.

The trainers contained questions on how to perform different functions of the new broker workstation, Gooley says. That left calls on supposedly broken system problems—like incorrect displays of information on customers and their accounts—to come into the call center.

"The rate of questions and the nature of questions has been incredibly mild. We just really haven't seen the flood that we had been expecting," Kilcoyne says. "We attribute that to the fact that the trainers are on the ground with people helping them acclimate."